State bank describes bailout for Doosan Heavy as inevitable choice

By Lim Chang-won Posted : March 27, 2020, 17:28 Updated : April 22, 2020, 15:43

[Yonhap News Photo]

SEOUL -- South Korea's state policy bank described a special bailout worth one trillion won ($826 million) for Doosan Heavy Industries & Construction as an inevitable choice to protect a key industry and stabilize domestic markets rattled by a global coronavirus pandemic.

Two policy lenders, Korea Development Bank (KDB) and Korea Export-Import Bank (Eximbank), approved quick loans for Doosan Heavy, a key contractor in South Korea's energy industry. The company has disposed of non-core assets due to an uncertain business outlook caused by President Moon Jae-in's policy of phasing out power plants using fossil fuel.

"Under the unprecedented financial crunch caused by COVID-19, policy funding was inevitable," KDB's corporate banking division head Choi Dae-hyon told reporters on Friday, adding Doosan Heavy's financial woes have great social and economic effects. "Support for market stability was also needed."

According to the Korea Investors Service, a credit appraisal agency, Doosan Heavy was saddled with 5.9 trillion in total borrowings at the end of 2019, including a credit of 4.9 trillion won from domestic and foreign financial institutions.

Doosan Heavy has made self-rescue efforts to improve its financial structure, including voluntary retirement, but it has failed to ease financial woes because of COVID-19. The company promised to pay back its debt through restructuring, saying the bailout would be enough to cover borrowing and restructuring costs as cash will continue to come in through existing orders.


 
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